Berkshire Hathaway Transcript 2009 Annual Meeting with commentaries

OWH has the most detailed Berkshire Hathaway “transcript”/”play by play” for the 2009 annual meeting that I’ve found. Hope you enjoy the Q&As with Warren Buffett and Charlie Munger.

My BRK AGM question (Thanks Carol)

I am really happy the super insightful Carol Loomis picked and asked the question I sent her (thanks Carol),

1:22 Carol Loomis of Fortune magazine asks for a shareholder who e-mailed the question what Berkshire is doing to restore its triple A rating, Buffett says it will not turn around anytime soon because credit agencies […]”

Note: See following commentaries section (marked by @1:22) for my detailed response/concern in Warren’s answer to my question.

[HT: Special thanks to Marcelo, Alice and also Sahil for sharing their insight in this Snowball Facebook group discussion thread that helped me to formulate the question.]

My commentaries on selected items in the AGM “transcript”

@9:03: Hmmm, I thought the magazines were not just any “magazines” but old Playboy magazines (big smile) if I remember right from another article (WSJ?) describing the annual movie.

@10:17: Hmm, Warren is theoretically right that “one or more investment managers do not have to actions right away” but I think Warren is wrong in potentially delaying the announcement of the replacement investment manager(s). A month or so of extra volatility, waiting, and guessing for BRK investors/speculators, I am not sure if I can agree with Warren on this.

@10:59: Re a question about the federal stimulus bill “Buffett says when the consumer pulls back the way they have, government needs to step in. Buffett also says there will be consequences. “I think we should be doing it, but we shouldn’t think its a free ride.”” Translation: we should do it, but there will be some pain later.

@11:47: “Buffett is asked about Berkshire buying back its own shares. Buffett says most of repurchasing of shares recently has been foolish because the stocks were too expensive. ” [Interesting. I wonder what are some of these companies?]

@11:52: Good question, interesting answer. “… shareholder asks about opportunity costs of recent decisions made by Berkshire.” “Buffett says he does live the opporuntity to make those kinds of decisions. Buffett says he had not faced in quite some time the kind of opportunities it saw last year.”

@1:11: Re BYD, “Munger says engineering graduates are being hired at BYD who were at top of their classes. He says it is a remarkable compilation of talent. Munger says lithium batteries are needed in every utility company in America and using power of the sun will need batteries. Berkshire has invested in BYD and Munger says it is not a crazy venture. Munger says that car to be seen in the Qwest Center Omaha, the company makes almost every part in that car.”

@1:15: Re inflation, “Buffett says it is an unprecendeted period but inflation is almost inevitable. Munger says he has seen a lot of inflation in his lifetime, so a little inflation wil not ruin lives. Munger says the trick is to avoid the runway.

@1:22: Thanks Carol for asking the question I sent. In Warren’s answer, I don’t understand how can the downgrades of BRK and all its subsidiaries have no “material effect on borrowing costs”?? Now, hearing “Buffett says Berkshire is still a Triple A in his mind” is nice as Warren is holding firm to his “inner score card“. Of course, to me, “in the minds of one credit rating agency that still has Berkshire at Triple A” is nothing to write home and brag about. Hmm, “Buffett says it is not material , Triple A“, really? Now, I am actually concern (“disturb” may be too strong) to read

… Triple A, but losing it at Moody’s still irritates him. Munger says Moody’s will turn around, because Berkshire deserve it and people at Moody’s are smart. Following on that comment, Buffett says when he and Munger disagree, Munger often will say “eventually you will agree with me because I am right and you are smart.”“.

If I were the credit analyst at Moody’s rating BRK and if I still want to maintain any resemblance of credibility, I would have to be the LAST analyst to raise BRK. BRK owns ~20% of Moody’s, in my humble opinion, Warren and Charlie should have known better and not to say anything like the above in BRK AGM. I guess I might have been too strict here. But I really don’t want to read this as a WSJ headline,

“Moody’s forced to raise BRK to AAA after strong words from Warren Buffett

Sorry Warren, your and Charlie’s words failed your famous “Salomon Headline Test“.

@2:27: Interesting question and answer re comp. “A shareholder asks about compensation in capital intensive industry. He assumes in his question that incentive bias caused some of the problems for financial institutions.” “Buffett says the CEO generally picks his own compensation. Buffett says boards have done very little thinking through as an owner how best to pay chief executives. Buffett says there should be no compensation committees on boards. Buffett says that should be thrashed out by the entire board.

@2:55 Great Q&A. “A shareholder asks if Buffett is 100 percent in equities right now in his personal portfolio and how low stocks are now. Buffett says today is not as dramatic as 1974 period in terms of cheaper stocks, […] Munger says today is nothing like 1973 or 1974 for buying stock. Munger says he knew at that time that he would never see another time like it. ”

@3:08 What a lovely way to end the 2009 AGM, “At that point, Alex proposed to his fiance and she said yes. Doris is Warren Buffett’s sister.” note: Alex Rozek is Doris Buffett’s grandson. Doris is Warren’s sister.

Thanks

I want to thank Mitch Sherman at Omaha World Herald for the wonderful live blogging transcript. By the way, I don’t quite understand why the OWH had chosen to embed all the text in flash?? Is OWH trying to stop search engines from indexing the text, thus giving its site and page a lower search ranking? Strange as Mitch had done all the hard work.

[HT: Motley Fool for the original OWH link]

P.S. Alan Schram of Huffington Post has a pretty nice set of notes of the things discussed at the 2009 BRK AGM.

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